Finance

The Investment Company Institute reported a large drop of inflows into municipal bond mutual funds at $142 million in the week ending Jan. 12, down from $1.413 billion in the previous week.

The 2-, 5- and 10-year UST is higher than before the pandemic began as investors factor in a rate hike as soon as March.

The largest deal of the week comes from the New York City Transitional Finance Authority with $950 million of exempts and $250 million of taxables.

For investors in the municipal bond market, 2021 proved to be a year of hurdles. This is likely to change, particularly for investors in the municipal bond market.

The primary led Thursday's firmer tone while Chicago schools faced 10 to 20 bp penalties compared to price talk, signifying investors are being more selective and demanding more in the new higher-yield range.

Supply is beginning to roll in and the primary action on Wednesday provided more direction. ICI reports $1.4 billion of inflows.

The agency cited “the appropriation of the full actuarial pension contribution in fiscal 2022 for the first time in 26 years" coupled with improved reserves.

Federal Reserve Board Chair Jerome Powell would not commit to timing for liftoff, stressing decisions would be data-based and the Fed will not allow inflation to become entrenched.

The second year of the pandemic unleashed unprecedented exogenous challenges for financial companies heading into 2022. What core trends will shape the industry moving forward?

Pressures from inflation concerns and broader rising rates weigh on munis in the second week of 2022.

Munis followed UST weaker while stocks sold off after the employment report, which offered many messages. Analysts believe the bottom line is the Fed will liftoff in March.

The rating agency is keeping the not-for-profit hospital sector's outlook stable as hospitals continue to benefit from the impact of federal coronavirus relief.

The Federal Reserve expects Omicron to fizzle in weeks, and while pandemic-related risks remain, the economy is strong and the Fed needs to address inflation and could liftoff as soon as March, Bullard says.

ICI reported $1.101 billion of inflows into municipal bond mutual funds for the last week of 2021. Refinitiv Lipper figures on Thursday may give a sense of investor sentiment for week one of 2022.

The U.S. Treasury selloff caught up to tax-exempts with two to three basis point cuts to scales, but munis still outperform.

Municipals triple-A benchmarks continue the trend of ignoring other markets to start 2022. The new year will likely usher in slower growth and continued inflationary pressures, analysts said.

Municipal volume is estimated at $1.13 billion for the opening week of 2022. Persistently strong net supply challenges will bias credit spreads tighter, credit discipline weaker in the next few years, analysts say.

A HilltopSecurities survey found skilled nursing and senior living as the sectors they were most concerned about for 2022.

Net supply pressure among tax-exempts is expected to worsen in January compared to last year and the move toward richer tax-exempts is unlikely to reverse. "Dealers seem to be acknowledging this looming challenge," MMA notes.

Investors will also receive $139 billion of interest payments in 2022, about $593 million more than in 2021, according to a report from CreditSights.